Aditya Birla Capital’s Stock At Over Two-Year High On Nod To Explore AMC Listing
Shares of Aditya Birla Capital Ltd. jumped to the highest in more than two years after the company’s board offered in-principle approval to explore listing of its asset management business.
“The board has provided its in-principle approval to explore an initial public offering of Aditya Birla Sun Life AMC Ltd., a material subsidiary of Aditya Birla Capital, subject to market conditions, receipt of applicable approvals and other considerations,” according to an exchange filing.
Aditya Birla Sun Life, according to Association of Mutual Funds in India, is the nation’s fourth-largest fund house with an average asset under management of Rs 2.55 lakh crore as of December 2020.
“Aditya Birla Sun Life is well placed to deliver strong growth in core earnings during FY21-24E. Robust equity AUM CAGR, driving broadly flat consolidated yields and improving operating leverage will support core earnings,” Kotak Institutional Equities had said in a note, initiating coverage on the stock on March 15. But “while the asset management business continues to deliver strong performance, a turnaround in the lending business will drive value”.
The brokerage also expects Aditya Birla Sun Life’s fund performance, diversified distribution mix and focus on business expansion in smaller cities to support AUM growth.
Shares of Aditya Birla Capital gained as much as 5.1% in early trade on Wednesday to Rs 134.9 apiece—the highest since Sept. 10, 2018. The stock is up for the second straight day. All the 11 analysts tracking the company recommend a ‘buy’, according to Bloomberg. The average of 12-month consensus price target implies an upside of 7%.